Comfortably Bullish

We are starting 2013 long stocks in Paul’s Virtual Value Portfolio with no covered call writing hedges for one reason – the Federal Reserve’s and other central banks’ plans to continue printing money into existence while debasing their currencies. This does not solve any problems such as too much spending on wasteful items, a perverse tax code, and a rushed-through fiscal deal that does not reduce the growing debt burden.

He concludes that, no, it hasn’t. “All the money that had built up on the sidelines from the Fed’s December pumping was seemingly all blasted into the market within the opening moments on Wednesday. However, we shouldn’t think that just because the buying looked orgiastic, that there isn’t more where that came from. The Fed will be pumping every other day now, and another huge slug of MBS [mortgage backed securities] purchase cash will be coming around mid month. That should outweigh any questions that might arise about the technical analysis, the biggest of which right now is how big this rally might be. “